The coronavirus pandemic is causing growing headaches for farmers and companies that grow and sell food-quality soybean products to foreign customers.
A heavy shift to online shopping has boosted demand for a host of consumer goods coming from Asia and created an unexpected shortage of shipping containers needed to send products on semis, trains and ships for export.
“It took longer to have a ripple effect inland, but now we have a mess,” said Darwin Rader, who is on the board of the Specialty Soya and Grains Alliance, a national association of companies focused on specialty food-grade soy products. He is international sales manager for Zeeland Farm Services, a Michigan-based soybean processor.
The alliance, along with other groups, has been lobbying American officials to help in easing the shortage, but Rader fears the inability to export soy products and a variety of other goods will linger late into the year and possibly into 2021.
The large steel shipping containers are often seen being carried on rail cars and semis before being delivered to ports where they are stacked high on container ships. In the past those containers were carried across the oceans, with containers filled with products dropped off and then other containers filled with goods loaded on ships for the return trip.
But since last fall, ships have brought containers laden with lucrative goods from Asia to the United States, but those ships return with empty shipping containers, leaving a big shortage for American goods.
Rader said when demand soared for grocery items and from people buying on Amazon and elsewhere online, Asian companies ramped up their exports.
“Last October and November we started getting notices from ocean carriers that they were not going to ship out as much exports (from the U.S.) because they wanted to deliver empty containers back to Asia as fast as they could. Consumers here were ordering things online that drove the consumer goods market in ways we hadn’t seen in the past,” Rader said.
“So we took a supply chain that was pretty balanced and then you saw ships backed up in harbors in L.A. and elsewhere, and that had a ripple effect. In the Upper Midwest, we ended up seeing fewer containers available to ship out of Minnesota, Omaha, Chicago and Kansas City. Shipments were delayed or just canceled.”
While Rader speaks for the food-grade soy sector, he said the container shortage is a big problem for much of the economy. “It’s affecting all U.S. exporters that use containers.”
He said that companies in Asia that depend on American food-grade soy products are scrambling to find other sources. “Once you lose your customers overseas, it’s very hard to get them back.”
Rader said if the situation continues through the summer and fall, producers and businesses won’t be able to get rid of last year’s soy crop products. “Customers want new crop, so if they can’t get last year’s product moved this summer, they’re going to lose even more business.”
He said the problem is also starting to gum up other parts of the supply chain as trains and semi trucks are having to wait for several hours to find shipping containers or not finding them at all. “So it drives up their costs.”
The Specialty Soya and Grains Alliance and other groups have been talking with officials from the federal Maritime Commission, Transportation Secretary Pete Buttigieg, Agriculture Secretary Tom Vilsack and members of Congress seeking help. Rader said U.S. officials have been supportive and are looking at trade regulations and other means to increase the supply of shipping contains.
“But that takes time. Some of these small businesses are running out of time,” Rader said. “It’s an urgent matter and getting more urgent every day.”